At a cost of $600 mn: RCom to lay 68K-km submarine data cable

The Eagle express submarine cable system, which will connect its base in India with Italy to the west and Hong Kong on the east, is expected to treble revenue in five years for its wholly-owned subsidiary Global Cloud Exchange, which is laying the cable, the company said

Reliance Communications (RCom) on Tuesday unveiled a new “cloud and fiber initiative” to lay a 68,000-km undersea cable at a cost of $600 million, for carrying data across Europe and Asia. The Eagle express submarine cable system, which will connect its base in India with Italy to the west and Hong Kong on the east, is expected to treble revenue in five years for its wholly-owned subsidiary Global Cloud Exchange, which is laying the cable, the company said. It is expected to be operational by the third quarter of 2020 and will have a revenue potential of $1 billion per year, RCom chief executive officer Bill Barney said. The new cable will increase its total capacity by 10 times as against the current capacity, he added.

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The cable will be financed by partners, whose numbers can go up till 30, he said, adding the company expects to get over $700 million through such pre-sales as against the cost of $600 million. It has already tied up with six partners, including Alibaba, for the cable and raised $300 million in commitments, he said. The Eagle cable system will create a NextGeneration IP and Cloud environment across the emerging markets corridor that encompasses the Middle East into Europe, as well as the large economies of China, India and Indonesia. Based on state-of-the-art 100G technology, the new cable network will be four/six fiber pair systems, with an initial design capacity of 12-24Tbps per fiber pair, using Next-Generation coherent submarine fiber.

Barney said the company expects a spurt in IT and telecom activity in the country over the next 5 to 10 years, due to which it is betting on the cable business. The cable potentially reaches over 75 per cent of the youth in the globe, which is also very educated, he said. “The Cloud and Fiber initiative is our response to the key requirements in the global marketplace, driven by the explosive growth in Cloud and infrastructure programs by enterprises around the world. Nearly half of the world’s population is reachable with a short distance from India’s borders, giving the country a strategic edge in the new digital era. This initiative levels the playing field for India’s companies to compete globally,” Barney said.

The company had exited the consumer-facing wireless business late last year, to focus on the enterprise segment. The size of what is being billed as the “new RCom” is much smaller but it is expected to be much leaner. Late last month the company sold its spectrum to elder brother-run Reliance Jio for an estimated Rs 23,000 crore which helped it skirt a slew of insolvency petitions and eventual liquidation.